2 more Pilot Flying J executives plead guilty to rebate scheme

Jul. 30, 2013

Written by

Walter F. Roche Jr.

The Tennessean

Two more Pilot Flying J sales executives have entered guilty pleas to criminal charges stemming from a scheme to skim millions of dollars from promised rebates to trucking company customers of the Knoxville-based travel center chain.

Seven Pilot executives and employees have entered pleas as a result of the federal investigation.

Entering guilty pleas to mail fraud charges Monday in U.S. District Court in Knoxville were Michael S. Fenwick and Janet M. Welch. Fenwick, a regional sales executive, was based in Utah, while Welch, a senior account executive, worked at Pilot’s Knoxville headquarters.

According to an FBI affidavit filed in April, Fenwick told an FBI informant that he was cheating truckers out of $70,000-$90,000 a month.

Fenwick, according to the filing, was charged with defrauding a California trucking firm when he mailed the company a reduced rebate check on Aug. 15, 2011.

Welch, according to the FBI affidavit, participated in secretly taped sales meetings in which staff were instructed on how to carry out the rebate skimming scheme without being detected.

The plea agreement states that Welch “actively participated in that break-out session and expressed her mutual agreement to participate in the conspiracy to defraud.”

Fenwick and Welch were charged with conspiracy to commit mail fraud.

Court records show the latest plea deals were dated July 7, but they remained under seal until the two appeared in court Monday morning.

The seven plea deals followed a highly publicized raid by the IRS and FBI on Pilot’s headquarters on April 15. Court records show that an informant secretly taped meetings of Pilot sales executives in which they discussed the scheme to cut promised rebates.

Fenwick resigned a little more than a week after the raid.

Pilot CEO James Haslam has denied knowledge of the scheme and has promised to pay back all those cheated plus 6 percent interest.

“We are disappointed and saddened that one of our employees and a former employee have admitted to knowingly and intentionally taking actions detrimental to the best interests of our customers,” a Pilot spokeswoman said.

Attorneys for Pilot have reached a settlement agreement in civil suits filed by some trucking firms over the rebate scheme, but several firms have refused to accept the settlement.